Ponzi Scheme Civil Penalties Called Overkill

(CN) – Civil penalties need not compound restitution for a man whose $27 million Ponzi scheme defrauded family members and charities, a federal judge ruled. The decision comes nearly four years after the Securities and Exchange Commission hit Garfield Taylor, his eponymous company and the Gibraltar Asset Management Group with a lawsuit in Washington, D.C. Regulators said Taylor soaked his own family and at least 130 others with the bogus promise that the loans he marketed would earn above-market interest rates. Taylor pleaded guilty to securities fraud in 2014, and a federal judge sentenced the 56-year-old Rockville, Md., man to 13 years in prison this past May. The sentence also included a $28.6 million order of restitution. Taylor represented pro se himself from the Allenwood Low correctional facility as the SEC moved to enter final judgment against him, with an addition of civil penalties. U.S. District Judge Rudolph Contreras concluded Monday that civil penalties against Taylor would be overkill, noting that the SEC failed to seek such penalties from the outset. “The court is mindful that Taylor was central to the fraudulent conduct at issue in this case and that civil monetary penalties provide a critical financial disincentive to engage in securities fraud that is not similarly served by disgorgement, alone,” Contreras wrote. “But given the commission’s omission, the previous award of restitution in Taylor’s criminal case, and the amounts the court anticipates Taylor will realistically be able to repay, the imposition of a significant civil penalty under these circumstances is not necessary to serve that deterrent purpose.” Contreras did assess three penalties for Taylor’s co-defendants, ordering Garfield Taylor Inc. to pay $725,000, Gibraltar Asset Management Group to pay $725,000 and man named Geoffrey King to pay $150,000.